Yes, CDY is participating in this month's EXPO (link below) and the huge sales potential is a no-brainer. My post today (extract below) estimated a sp of 33c to 66c in 12 -24 months based on Evolis sales in China alone and I was scoffed at. IMO the 33c could be reached within 6 months. Any contact signing announcement with the pharmacy agents will be seen by the market as opening the China door to a wide horizon.
My estimates were cautiously optimistic given the uncertainty and 'known unknowns'. My NP to sales of 22% compares with CSL's 24%. As the Evolis gross profit to sales is reported to be 70% does anyone think 22% is too optimistic? Or that only 20 to 40 Evolis buying customers in each of the estimated 4% only of the total number of pharmacies to be represented at the Expo that CDY is estimated to gain access to is pie in the sky? Or that a pe of 20 is overstated? CSL's PE exceeds 70.
A key objective of the Expo is to reposition Chinese pharmacies to sell less of medicines and more of well-being & complementary health products. Evolis is fit for purpose.
____________________________________________________
Extract from today's post:
Consider the company changing event directly in our faces: Don't underestimate the potential rerate in CDY's sp from its participation in the Chinese pharmacies expo in a little over 3 weeks time. Contracts are likely to result by this month end with potential substantial Evolis sales in FY 2016/17 and beyond through 10,000s of Chinese pharmacies.
A conservative estimate of year China sales, if even 4% of pharmacies represented at the Expo (i.e. 9,600 out of 240,000) sign up, is $A98,000,000 pa.. That assumes 20 Evolis customers per pharmacy for an annual spend of $A510 each customer (this may be underestimated). If CDY achieves a net profit % of 22% after all selling and admin & overhead expenses, the estimated net profit from China alone is $21,000,000. Ignoring the benefit of past tax losses, the China Connection estimated after-tax profit of $A16,000,000 should support a sp of $A0.33 ( PE of 20). If the assumed number of customers per Chinese pharmacy is doubled to 40, the after-tax profit of $A32,000,000 points to a sp of $A0.66. That's a possible 22 bagger from China alone.
(20min delay)